Sales Quota Management

What is sales quota management?

Sales quota management is the process of managing sales quotas or targets set for specific periods of time. It involves analyzing sales performance, periodically setting goals, and driving the goal toward achieving desired results.

Sales quotas are quantitative goals set by managers to measure and compare individual salesperson's performance and help determine their compensation.

Sales quotas are essential when it comes to generating higher earnings and revenue for an organization. During the sales quota management process, sales professionals are given specific targets which are used to evaluate their performance. This method of setting goals for sales representatives is used by businesses worldwide to ensure that their sales teams adhere to the agreed-upon metrics.

Sales quota management is facilitated by sales performance management (SPM) software. SPM software enables sales managers to keep track of sales activities in relation to the set goals and quotas. These performance indicators aid in identifying individual strengths and shortcomings, visualize data and offer insights for business executives.

Why is sales quota management important?

Each organization has different sales targets for its sales reps. These targets are set so that they do not seem too high to remain achievable, but they also keep sales reps on their toes throughout the year.

Sales representatives and teams around the world use quota management as a way to drive team performance and increase revenue. If the sales team performs reasonably well, it can improve the growth rate of a business. Businesses that work with sales quota management do so to track the performance of their sales team on a daily, weekly, monthly, quarterly, and yearly basis, as it gives vital information as to where the company is in relation to its goals.

Setting goals and monitoring progress also ensures greater transparency regarding the performance of individual sales reps and their teams. Businesses also use sales quota management to determine what bonuses should be paid to sales reps after a certain period.

Types of sales quotas

The type of sales quotas a business uses can affect performance and revenue. So it's essential to select the right quotas by keeping in mind the business objectives and sales targets.

There are six major types of sales quotas:

• Sales volume quota: This is based on the number of units sold and monetary incentives given within a specific time period. It may be further subdivided to fit sales representatives, product range and line, branch offices, location, and more. This is best suited for sales forecasting and tracking sales team activities.
• Profit quota: A profit-based quota requires sales representatives to generate a specific amount of revenue for the organization by selling products and services for a certain amount of money. This sort of quota is beneficial if a business has many target markets and pricing points.
• Expense quota: These are connected to the product cost and a reasonable time frame. Few organizations assign quotas for expenses based on the sales levels attained by the representative. The sales team may be allocated an expenditure budget that is a percentage of the region's projected sales volume, and the sales rep's expenditures must be confined to this amount.
• Combination quota: Some sales representatives must use a variety of tactics to close sales. This entails setting modest, attainable goals to accomplish a bigger purpose. Managers can create one-of-a-kind combinations to assist sales representatives in mastering and improving a range of abilities.
• Activity quota: An activity-based sales quota is determined by the number of sales-related actions that a sales professional must complete during a given time period. This can include everything from making phone calls and sending emails to visiting clients and submitting paperwork. The goal of these events is to increase sales and monitor the sales reps' actions.
• Forecast quota: The forecast quota is dependent on the revenues that a manager and the team are anticipated to achieve in a particular region. The prediction is based on the past year's performance. Forecast quotas aid in determining where the firm's revenue sources originate from and how they impact the business.

Benefits of sales quota management

Sales quotas impact the amount of revenue that comes into a business, which makes it very important to keep track of the performance of sales reps to ensure that they are doing everything possible to meet or exceed their goals.

Sales quota management helps businesses in a variety of ways, including:

• Simplifying quota planning by creating equitable and attainable quotas based on various data sources
• Identifying the sales team’s strengths and weaknesses
• Analyzing individual quota performance to provide actionable insights
• Ensuring that the team's sales quotas are in sync with the market

Sales quota management best practices

Sales quota management, regardless of industry, is a process that can help businesses to create superior sales volume, improve communication between salespeople and managers, set performance expectations, and decreases the number of quotas left up to chance. It can also be a perfect way to motivate a sales team, as they know that the pressure is on.

Here are some best practices to follow when creating a strategic sales quota management process:

• Instead of basing quotas only on what businesses believe their reps are capable of, they should consider the desired result. Companies need to determine how many deals sales reps will need to close based on their targets. If that figure doesn't match the quotas based on previous data, it's time to rethink the objectives and how to achieve them.
• Allow sales managers to change quotas once they've been set. This helps manage unexpected situations while also gaining quota buy-in from their sales team. Quota relief is important, and well-executed quota relief might even lead to higher performance.
• Sales quota management has traditionally been a time-consuming, manual, spreadsheet-based procedure for both sales leaders and administrators. With sales performance management software, managers can distribute and establish quotas while still keeping an eye on the overall state of the quota management process.
• Setting quotas shouldn't come from a select team of individuals. Bring in all stakeholders to establish a fair quota.  This includes the sales management team – which has a firsthand perspective of market circumstances – and the finance and sales operations teams, who may have a deeper understanding of market conditions and the sales team's past patterns.
• CRM data is useful during quota planning. Businesses should integrate SPM solutions with CRM software to provide a complete view of sales situations.